1. Field of the Invention
The present invention relates to a credit card billing system and method, and more particularly, to a system and method which provides for allocation of expenditures made by a credit cardholder, as well as allocation of interest attributable to each of the expenditures and payments made by the cardholder, to sub-accounts specifically designated by the cardholder using an electronic device, wherein the designated sub-account is transmitted to the credit card company along with the expenditure amount, the credit card account number and other data. Examples of an electronic device suitable for this purpose include: a programmable transaction card (i.e., a smart card); an electronic wallet; a portable electronic terminal and/or a personal computer. Examples of credit cards include credit cards, debit cards, check cards, and the like.
2. Description of the Related Art
At the current time, all issuers of credit cards, such as Visa, Mastercard, and American Express, render periodic billing statements to their cardholders which list all expenditures and accrued interest. Where multiple cards are issued under one account, such as a business organization having cards for multiple employees or a family with several family members using an account, some credit card issuers list the expenditures and also reflect which person using the account incurred each expenditure. However, presently known credit card billing systems and methods do not provide a means for credit card users to have expenditures, accrued interest on each expenditure and payments, allocated to one or more sub-accounts specifically designated by the credit card user within a single credit card account.
It is commonly necessary for a credit card account holder to account for and allocate each expenditure for various tax or business purposes, such as:
(i) Tax deductible versus non-deductible expenditures;
(ii) Tax deductible versus non-deductible interest expense;
(iii) Expenditures, including interest, which may be billed (i.e., passed thru) to a customer or client of a cardholder; and
(iv) General or specific cost control accounting. Under the present billing system utilized by all credit card issuers, in order to account for each individual expenditure, the cardholder must examine each expenditure and determine from the person incurring the expenditure, which may be an employee, family member, etc. the nature and purpose of the expenditure. This presents a substantial accounting undertaking which is exacerbated where an organization or family has numerous persons incurring expenditures on one account.
Furthermore, when paying a credit card bill, present billing methods do not allow a cardholder to specify a sub-account(s) to which all or a portion of the payment is to be credited, and to thereby leave outstanding balances, with accruing interest charges, in other sub-accounts, in accordance with the tax, business or accounting needs of the cardholder. At the present time, there is no method by which a cardholder can allocate payments so as to control and identify the specific prior expenditures as to which interest is accruing. This shortcoming may have adverse tax and business consequences for the cardholder. For instance, a tax deduction for the payment of accrued interest expense may be lost or the right to pass the interest charges on to a customer or client of the cardholder may be lost because the interest expense cannot be tied to a particular expenditure or group of expenditures. The present invention, therefore, produces a useful, concrete and tangible result because the creation of the sub-accounts results in substantive changes in tax and business consequences to the cardholder which cannot be achieved with any presently existing credit card billing methods or bookkeeping method which may be employed by the cardholder.
My invention, as described and claimed in previously filed patent application Ser. No. 09/195,132, provides a unique system and method which allows each person incurring credit card charges to designate a specific sub-account to which each expenditure and interest attributable thereto shall be allocated by the credit card issuer to be reflected on each billing statement to the cardholder. The cardholder may thereby obtain the information provided by the separate sub-account listings on each credit card statement to satisfy and resolve the credit card holder""s need to account for various categories of expenditures, such as:
(i) Tax deductible versus non-deductible expenditures;
(ii) Tax deductible versus non-deductible interest expense;
(iii) Expenditures, including interest, which may be billed (i.e., passed thru) to a customer or client of a cardholder; and
(iv) General or specific cost control account. In addition, this unique method will also allow the credit card holder to specify each sub-account to which each monthly or other periodic payment by the cardholder is to be allocated, thereby determining which specific expenditures are to remain outstanding and accrue interest charges.
In a preferred embodiment, the sub-accounts are electronically entered by the cardholder at the time of purchase with the use of an electronic device having a keypad, a memory and a display. Specifically, the present invention contemplates the use by the cardholder of a smart card, electronic wallet, a portable electronic terminal, and/or a personal computer for electronically entering the designated sub-accounts at the time of purchase.
A smart card is an electronic device typically including a microprocessing unit or CPU and a memory suitable for encapsulating within a small flexible plastic card, for example, one that is about the size of a credit card. The smart card additionally includes some form of an interface for communicating with an external system. Examples of smart cards of this nature are disclosed in the Wallerstein U.S. Pat. No. 5,955,961, Nagata, et al., U.S. Pat. No. 4,959,788, and Piosenka, et al., U.S. Pat. No. 5,777,903. Typical applications for smart cards include the transfer of information of all types relative to banking and other financial transactions, transportation, subscriber health and identification. The smart card additionally includes input/output (I/O) signal interface for transferring various I/O signals between the smart card and an external system. The interface may take the form of a contact interface, which requires that the smart card come into contact with the external system, or a peripheral thereof, for proper transfer of signals. Alternatively, the interface may take the form of a radio frequency (RF) interface for allowing communication between the smart card and the external system via the transmission and reception of RF signals. The external system may take the form, for example, of a card reader, a merchant""s point of sale system, or an automated teller machine.
Ideally, the smart card includes a microprocessing unit (MPU) or a central processing unit (CPU) for executing instructions stored in memory. The smart card further includes a display, coupled to the MPU, for displaying information, a keypad, coupled to the MPU and the display, for entering data by the user, and the interface for transferring signals between the smart card and the external system when the smart card is coupled to the external system. The smart card may further be provided with a power source such as a battery and/or photovoltaic cells for providing power to the smart card when the smart card is exposed to light, thus providing a solar power source.
Electronic wallets come in various forms and typically include a keypad and a display. U.S. Pat. Nos. 4,614,861 to Pavlov, et al. and U.S. Pat. No. 4,707,594 to Roth disclose electronic wallets in the form of self-contained cards including a power supply, user interface, processor and static magnetic strip. Roth""s patent is very much related to wallet design, with media interfaces limited to a keypad and display. Pavlov also provides keypad input and display output and relates primarily to data security. Additionally, an electronic input/output port is also provided. A number of other patents and publications discuss electronic wallets that provide a processor, memory, a user interface, a power supply, and a card processor reader/writer.
U.S. Pat. Nos. 4,277,837 to Stuckert and U.S. Pat. No. 4,523,297 to Ugon, et al. are examples of electronic wallets that provide magnetic reader/writer capability. Ugon demonstrates the viability of communication between an electronic wallet and a card micro module via a smart card reader/writer and also includes an electronic wallet card insertion slot. Stuckert discusses a card processor interface and a radio frequency transmitter. U.S. Pat. No. 5,748,737 to Dagger is an example of an electronic wallet which provides multiple data media interfaces. Standard interfaces will include a smart card reader/writer, a magnetic reader/writer, a radio frequency transceiver and a user interface. Dagger discloses a compact electronic wallet which includes a interface for receiving input by the user, including medium transaction and commands, a processor connected with the interface for controlling the operation of the electronic wallet in response to the user input, and a smart card interface connected with the processor for transferring data between the electronic wallet and processing circuitry on a multi-media transaction card. The Dagger compact electronic wallet further provides magnetic medium interface means connected with the processor for reading and writing data to a magnetic medium on the multi-media transaction card.
A further example of this type of electronic wallet is provided by Mondex. An electronic purse card is outlined in a publication entitled xe2x80x9cMONDEX-The Worldwide Alternative to Cash.xe2x80x9d Electronic monies are carried on a smart card and an optional handheld wallet that includes a display, keypad, and a smart card interface is also provided.
U.S. Pat. Nos. 4,701,601 to Francini, et al., U.S. Pat. No. 4,868,376 to Lessin, et al., and U.S. Pat. No. 4,814,591 to Nara, et al. are all examples of electronic wallets with a magnetic medium emulator and user interface, while U.S. Pat. No. 4,791,283 to Burkhardt and U.S. Pat. No. 4,786,791 to Hodama are examples of magnetic strip emulator cards.
The present invention provides a data processing system and method for allocating transaction expenditures incurred by a credit cardholder, and accrued interest attributable thereto, to sub-accounts specified at the point of purchase by the person incurring the charge. In a preferred embodiment, the sub-accounts are electronically entered by the cardholder with the use of an electronic device. Examples of electronic devices which are contemplated for use in conjunction with the system of the present invention include, but are not limited to, programmable transaction cards (i.e., smart cards and integrated circuit cards), electronic wallets, a portable electronic terminal, and/or a personal computer which may be equipped with a credit card reader/writer peripheral device and a modem. As used hereinafter, the term xe2x80x9celectronic devicexe2x80x9d shall be deemed to include the above-identified devices. Furthermore, as used hereinafter, the term xe2x80x9ccredit cardxe2x80x9d shall be deemed to include credit cards, debit cards, check cards, and the like.
The present invention also provides a data processing system and method for allocating payments by a credit cardholder of principal and/or accrued interest to the sub-accounts designated by the cardholder. The data processing system tracks all expenditures and interest attributable thereto, as well as payments, in specific sub-accounts to be designated respectively, by the person incurring the expenditure or making the payments, so that aggregate expenditures, interest accruals and payments may be determined for each sub-account for any accounting purpose desired by the credit cardholder. The present invention, therefore, produces a useful, concrete and tangible result because the creation of the sub-accounts may also result in substantive changes in tax and business consequences to the cardholder which cannot be achieved with any presently existing credit card billing methods or bookkeeping method which may be employed by the cardholder. The present invention also results in efficiencies and cost savings by facilitating identification by the credit card user at the point of purchase of the sub-account to which the expenditure is to be allocated.